The oil and gas group BP is launching a fresh cost-cutting scheme, despite reporting better-than-expected profits, as it tries to do more for its shareholders to fend off pressure from activist investors.
It said it would begin a fresh review of its business when its new chair joins in September.
BP reported a rise in profits to $2.35bn (£1.77bn) between April and June, a drop of 15% on the same period a year earlier, when the company benefited from higher oil and gas prices.
However, it was an increase on the $1.38bn reported in the January to March quarter, and beat analysts’ estimates of $1.8bn underlying profits.
Murray Auchincloss, BP’s chief executive, said in a statement on Tuesday that the FTSE 100 company had performed well “operationally and strategically”, even though crude oil is trading at about 10% lower than it was in the first quarter.
Currently trading just under $66 a barrel, Brent crude prices were on average $80 a barrel in 2024.
Auchincloss added: “So far this year we’ve brought five new oil and gas major projects onstream, sanctioned four more and made 10 exploration discoveries.”
Disclosing a 4% increase in the shareholder dividend to 8.32 cents in the first quarter, he said: “BP can and will do better for its investors.”
The CEO said he and the chair-elect, Albert Manifold, who takes up the position in October, had agreed to conduct a review of its businesses; earlier this year BP revealed it would cut more than $5bn from its previous green investment plan.
Under the departing chair, Helge Lund, BP invested heavily in the offshore wind industry, which has suffered increasing costs in recent years, at the same time as its rivals were able to take advantage of the surge in fossil fuel prices following Russia’s invasion of Ukraine.
The activist investor Elliott Management has also been pushing BP to cut its operating expenses more aggressively and has called for more cost reductions.
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Russ Mould, investment director at broker AJ Bell, said: “Despite already announcing a round of significant cost-cutting, further efficiencies will be sought.
“At present BP still has a modestly larger workforce than Shell – based on the companies’ respective last reported headcounts – despite being a significantly smaller business in terms of its valuation and annual revenue.”
The results came a day after BP said it had made its largest oil and gas discovery of the past 25 years off the coast of Brazil, at a time when BP is shifting away from renewables and once again focusing on fossil fuels.
BP is carrying out tests at the Santos basin, which is located in deep waters. It marks the company’s 10th oil discovery of the year and could be its largest since its discovery at the Shah Deniz gasfield in Azerbaijan in 1999.
